In our weekly series, How I Save, we track people’s spending, look at how they handle their budget, and get some expert wisdom on how they (and we) can save better.
The idea is to get more people talking openly about the tricky issues around our finances – so we can get rid of the shame and ask for help when we need it.
This week we’re nosing around the bank accounts of Lucy*, a 26-year-old freelance production coordinator living in South Wales.
After buying her first home, Lucy is a pretty solid example of living within your means when you don’t have a regular salary.
How Lucy saves
I earn around £21,000 a year. In my savings account right now I have £12,500.
I’ve saved this much money by holding back money each month when getting paid.
I used to live in London and someone gave me the best advice of having three months rent behind you – as being freelance, you never know when your next job is. This has been drilled into my brain and I use high-interest regular savings accounts to max interest on savings.
I’m saving for a holiday (typical thing to save for!). I’m planning on going away next year so have plenty of time on my side to save, luckily. I also save for emergency fund for example if I was to be out of work.
In the last year I bought a house with my partner and wouldn’t want to rely on my parents or him to pay my half.
The main way I save is by locking the money away. Out of sight out of mind does the trick for me, if I can’t see it I can’t be tempted to spend loads. I also find by having a Monzo card and putting X amount of money on it per month helps with budgeting.
How Lucy spends
Monthly expenses:
Lucy pays half of each of the below payments as she lives with her partner
- Mortgage: £679
- Council Tax: £159.80
- Electricity & Gas: £78
- TV & Internet: £50
- Water: £35
- Life Insurance: £40
- Food shopping: £100
Then her personal expenses are:
- Eye care: £10
- Phone Bill: £15
- Regular saving account: £250 on direct debit
A week of spending:
Monday: Monday’s are my least favourite day! I have prepared salad and fruit for lunch, which I brought from home so no money spent on lunch. I buy a weekly bus ticket for £15 to get me around the city for the week. Home to chill and watch the soaps. Monday complete.
Total for Monday: £15
Tuesday: Got a cheap salad on my way in to work for 59p in Co-op to get me through the lunch hour (I bring snacks and fruit with me from home).
I pop into the shops on my lunch break and get some new shoes from Primark for £9. The ones I currently have deffo need to go so I don’t feel guilty purchasing these! My weekly bus pass gets me home and have some pasta with cheese to cook.
Total for Tuesday: £9.59
Wednesday: It’s miserable outside today so browse online at some clothes. I end up spending £61.68 on myself at boohoo which consists of three dresses and a new coat. It’s quite rare that I splurge this much on myself but it is sale season and I have some spending money from Christmas. I do want a new coat for the holiday and I think that now is the best time to buy one cos they will be so cheap, right?!
Salad brought in from home for lunch so this slightly makes up for it.
Get home after work and my boyfriend suggests a takeaway. Of course I say yes but we use our joint card to split it. I pay my half £7 and save a ton of washing up.
Total for Wednesday: £68.68
Thursday: Starting to slack towards the end of the week…. I couldn’t be bothered to bring in any food today, so I buy a meal deal and a bag of Doritos from Tescos for £4.
I’m running low on essentials like shampoo and deodorant so pop into Boots – another £4 spent.
Get home from work and treat myself to using one of the Lush bath bombs I had for Christmas, bliss!
Total for Thursday: £8
Friday: I pick up a pasta bowl for lunch for 52p which goes alongside crisps and fruit brought from home.
I go for an eye test after work but the cost of this is included in my monthly eye care subscription.
I head to my parents for a catch-up and some tea – £0. We go via the supermarket on the way back to mine and I do a weekly food shop which I pay for on the joint card for £32.04
Total for Friday: £32.56
Saturday: I stay at home today doing cleaning and tidying up. My mum picks me up and I go to hers for lunch – £0 spent.
We hit up the sales at M&S as I have a voucher to use from Christmas and get some black jeans for £7, bargain! Pizza for tea (from the freezer of course – it is January!), and drinks in the house.
Total for Saturday: £7
Sunday: No plans today, my sister in law picks us up and we head to see her brother and wife. We are there a few hours and then she drops me and my boyfriend home.
We have roast dinner for tea with things bought in the food shop. Time to get everything ready for Monday morning again… £0 spend.
Total for Sunday: £0
Total spent this week: £140.83
How Lucy could save:
We spoke to the experts over at Plum, an AI assistant that aims to boost your bank balance, to find out how Lucy can save better (and what we can learn from her spending).
Note: the advice featured is specific to one individual and doesn’t constitute financial advice, especially for a London budget.
Here’s what Plum said:
Thanks for sharing your week with us!
It’s been fascinating to take a foray into the financial life of a freelancer, as more and more of us are finding this approach fruitful when it comes to funding our fun (and future). What’s clear is that your diary is a good example of how to boss the freelance lifestyle.
Saving
When it comes to saving, this clearly ain’t your first rodeo. It looks like you formed some good habits when you were saving for your house and you’ve been able to keep them going, which deserves a fist-bump.
Tucking money away at the start of the month is a great tip for everyone (out of sight… out of mind), but this is particularly true for freelancers who can’t predict their next paycheck.
Now you’ve more than exceeded your target to have three months rent saved, you can separate that money out and think about the fun stuff. You already mentioned a holiday and an emergency fund – so save yourself some mental arithmetic by using an app to automatically split your deposits between these goals (Monzo or Plum are two that can do this).
Shopping around for a savings account with a decent rate of interest (one that beats inflation) is also a good plan.
As for your long-term savings, think about diversification, which will stop all your eggs being in one basket. Investing in stocks and shares, for example, would be a good way to grow a portion of your money that you don’t need instant access to. Bear in mind however that your capital is at risk with any form of investing.
You don’t mention a pension and, as you’re a freelancer, you won’t be enrolled in a scheme automatically by your employers. According to the Money and Pensions Service, only 31% of self-employed people currently save into a pension, so if you’re in the other 69%, it may be worth thinking about getting a personal one. Boring as it sounds, putting small and regular amounts into a pension now will reap big rewards later on.
Budgeting
Your budgeting skills are awe-inspiring! One of your biggest budgeting wins is the weekly food shop, which you split with your partner. £100 is pretty good going for a month’s shop that stretches to both lunch and dinner most days, with only £5.11 spent on extra lunch items during the week.
As for your other regular payments, it’s hard to see anywhere where you could be making further savings. Checking regularly if you could switch your energy or phone provider is a good way to keep bills as low as possible.
It’s a great strategy to scrimp at the start of the week so you have a bit of leeway when Thursday rolls around. We all need treats sometimes and this is a good way to make sure you can enjoy them guilt-free.
Also, nice work on the sale shopping. Sales can sometimes be counterproductive to our financial planning as they tempt us to buy things we don’t really need, but it sounds like you’re making a smart choice by thinking ahead and buying a coat while it’s reduced.
*Name changed.
How I Save is a weekly series about how people spend and save, out every Thursday. If you’d like to anonymously share how you spend and save – and get some expert advice on how to sort out your finances – get in touch by emailing ellen.scott@metro.co.uk.
If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join Money Pot, our new Facebook group.
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source https://metro.co.uk/2020/01/30/save-26-year-old-freelance-production-coordinator-earning-21000-year-12500-saved-12152286/
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